The donut category will see a boost in retail sales in 2024, and companies like Krispy Kreme Inc. and Shipley Do-Nuts hope that trend will continue in 2025.
Krispy Kreme has seen growth in its retail and distribution businesses over the past year. During a Nov. 7 conference call with analysts about fiscal 2024 third-quarter results, Krispy Kreme executives said the Charlotte, North Carolina-based company had $1.23 billion in sales for the first three quarters of the year, up 1.9% year-over-year.
Krispy Kreme also expanded its daily fresh delivery (DFD) business in the third quarter, completing successful DFD pilots in Los Angeles and Washington, adding more than 150 Target stores, and expanding store coverage at Walmart and Kroger.
Krispy Kreme aims to have more than 15,000 locations in the U.S. by the end of 2026, including more than 12,000 McDonald’s stores.
“To better align our talent and capital with our business priorities, we are now restructuring our management team to focus on maximizing profitable expansion in the U.S. while focusing our international operations on broader adoption of our capital-light franchise model,” said Krispy Kreme CEO Josh Charlesworth.
In late November, Krispy Kreme suffered a cyberattack that disrupted operations, including online ordering. The company said in a filing with the U.S. Securities and Exchange Commission that it expects the incident to have an operational and financial impact until recovery efforts are complete.
“The expected costs associated with this incident, including loss of digital sales revenue during the recovery period, fees for cybersecurity experts and other consultants, and the cost of restoring any affected systems, are likely to materially affect the company’s results of operations and financial condition,” Krispy Kreme said in the filing.
The company holds cybersecurity insurance that is expected to offset a portion of the costs of the incident. The company does not expect this incident to have a material, long-term impact on its results of operations and financial condition.”
Meanwhile, Houston-based Shipley Do-Nuts opened four new stores in the fiscal third quarter, added to its development pipeline, and achieved its 15th consecutive quarter of positive same-store sales growth. The company attributed the new store expansion to its expanded development team.
Shipley’s opens more than 360 units in 2024 and is on track to set a two-year record for openings.
As of November 2024, the company has added more than 110 units to its development pipeline and said in early December it would expand its presence in Florida and Tennessee under a 22-unit franchise agreement with Virentes Partners Group.
The company will also enter two new states, North Carolina and Virginia, in the first quarter of 2025.
“With our faster development cycle, new stores in the pipeline, and some significant multi-store deals, we are on track to achieve our aggressive growth goals,” said Keith Sizemore, senior vice president of franchise development at Shipley Do-Nuts.
We are seeing growth again from long-term franchisees, while new franchisees are being attracted to our system by our updated business model, proven profitability, and product line that is well suited for multi-store operators looking to diversify their portfolios.”
Shipley Do-Nuts said product innovation has helped increase customer engagement and sales over the past year. In January, the company launched Poptastic Freeze-Dried Rainbow Sugar Donuts, which it said was its first limited-edition product in decades.
This was followed in April by the launch of Oreo Cookies and Dream Donuts, which were available in more than 350 Shipley Do-Nuts stores as of June 30.
Shipley also conducted an early test of its third-quarter promotion, a breakfast egg, cheese, and jam roll-up, which the company said far exceeded expectations and was the largest limited-time promotion in its history.
“Our new jam rolls and quarterly LTO donuts represent our continued menu innovation to provide guests with an exceptional experience,” said Kaitlyn Venable, executive chef at Shipley Do-Nuts.
Deborah Andrews, vice president of foodservice baking marketing at Rich Products, Buffalo, N.Y., attributes the success of the donut category to its alignment with key consumer trends, including the need for affordable, convenient sweet treats.
“Consumers’ desire for snacking and individual indulgences/treats continues to grow, along with the need for ready-to-eat foods,” Andrews said. “Not only do donuts tap into these trends, but they are priced lower than other snacks, providing consumers with a delicious way to satisfy without breaking the bank.”
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